Chairman Crapo Releases Outline for Housing Finance Reform

Last month Joseph Otting, the acting director of the Federal Housing Finance Agency (FHFA), told FHFA employees that the Administration would proceed with a plan to end government control of Fannie Mae and Freddie Mac (the government sponsored enterprises, or GSEs) without Congress, where efforts to overhaul the housing finance system have failed over the past decade. The White House then stated that it expected Congress to play a key role in the effort, and Senate Banking Committee Chairman Mike Crapo (R-ID) released an outline for reforming the nation’s housing finance system in which the GSEs would become private guarantors with the primary business of guaranteeing the “timely repayment of principal and interest to investors of eligible mortgages that are securitized through a securitization platform operated by Ginnie Mae.” The proposal would replace the GSEs’ affordable housing goals and duty-to-serve requirements with a new “Market Access Fund, which will provide grants, loans, and credit enhancement to address the homeownership and rental housing needs in underserved and low-income communities,” all of which would be financed by a 10-basis-point assessment on the total volume of loans mortgage guarantors generate. Read Enterprise’s recommendations for supporting affordable single-family and rental housing in housing finance reform. The proposal also calls for changing the structure of the Federal Housing Finance Agency, the GSEs’ regulator, from a single-director structure to a bipartisan board of directors.

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